Report: T-Mobile Is The Target Of A Trujillo Private Equity Buyout

Oh here we go again as former telecommunications executive Sol Trujillo is said to be working on finding private-equity firms interesting in financing a buyout of part or all of T-Mobile USA. Trujillo, the former head of phone companies U.S. West Communications, Orange SA  and Australia’s Telstra Corp has approached at least two private-equity firms: KKR & Co and Blackstone Group LP about bidding for all or part of the nation’s fourth largest carrier.

According to the Bloomberg report, the groups that have held “preliminary” discussions with Trujilo have “reacted with skepticism to the proposal due to its size and cost of financing.” T-Mobile USA is said to be worth as much as $30 billion, with spectrum as its most valuable piece.

Trujillo has also said to be holding the same type of talks with private-equity groups interested in taking over the nation’s third-largest operator, Sprint.

“Financing is cheap right now. But even though it’s possible, it doesn’t mean that such a deal is going to happen,” said Tom Taulli, a Newport Beach, California-based consultant for mergers and acquisitions. “We’ve not seen many $10 billion- plus leveraged buyouts anywhere.”

Trujillo declined to comment, as did Deutsche Telekom, Sprint, KKR and Blackstone. Deutsche Telekom does however remain open to a partial or complete sale of its U.S. division and would use the money to further invest in their European assets. According to persons familiar with the matter, a private-equity sale has not been discussed by Deutsche Telekom’s board.

With U.S. carriers struggling to accommodate surging data use in big cities, most potential buyers “would find T-Mobile’s spectrum far more compelling than its customer base,” said Atlantic Equities’ Watts.

A stand-alone deal to buy T-Mobile would likely face less regulatory hurdles as such a deal would be thought not to reduce competition in the same manner an AT&T takeover would have.

The real question we’re asking is whether or not now is really the right time for DT to explore a buyout? With a $4 billion network investment now underway and a “challenger strategy” set to revitalize the company, T-Mobile hopes to have a plan to re-energize the business into 2013. T-Mobile is also in the midst of selling of the company’s 7,000 US towers, which will offer a $2-3 billion investment in T-Mobile’s network strategy.

No matter how much we may want it, it seems that T-Mobile is always at the front and center of buyout rumors. Will they never end?

Fierce Wireless via Bloomberg

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  • Trevnerdio

    Noo!

  • Jonathan

    You know what?  At a certain point I really feel that in the long run T-Mobile USA will be better off with new owners.  

    DT will never allow for the CAPEX spending that T-Mobile USA needs to be on par with its larger US rivals.  To accomplish this TMOUS would need to spend at least $20 billion per year for the next 5 years to catch up.  That’ll never happen.

    T-Mobile is not providing the “competition,” that so many on this board paraded as a defense against the AT&T acquisition.  Instead they are falling apart.  Terrible customer service, terrible network coverage in many areas and poor retail experiences are the new norm.  Most customers would pay $15 or $20 more per month for better coverage on AT&T or Verizon along with access to better phones including the iconic iPhone that everyone and their mother seems to want.  

    I have a feeling that private equity buyers will buy T-Mobile’s assets then sell of the spectrum to AT&T in the end at a premium.  AT&T will get the airwaves they need to be on par (or better) than VZW and all of us will be poached by a new carrier of our choice.  

    • Trevnerdio

      As much of a kick in the stomach that is, I think it’s true :( screw the iPhone, it sucks, but yeah it seems like everyone wants it. T-Mo is standardizing their airwaves, but really, who is going to go for an unlocked iPhone, full price? A very select few.

      • Jonathan

        Agreed Trevor.  I’ve always been a big fan and supporter of T-Mobile.  I kept hoping that somehow someway they’d see the light. 

        I live 40 minutes northeast of Los Angeles.  I’ve been in T-Mobile’s 3G area since late 2008 yet my data speeds are under 200 Kbps and if I drive north on the freeway a few miles I’m back on EDGE or GPRS.  Go south on the FWY and my phone goes between EDGE, GPRS and/or GSM only. 

        I just don’t see how sustainable a company is when the only way they can expand their network is to get money from an acquisition breakup?  I mean what wireless company plans their network expansion plans on failed acquisitions? 

        I read the Q2 financials really well.  The only way T-Mobile made money was by increasing the costs of their phones for both new net adds and upgrades.  Good for them but to me it seems like a lose lose proposition.  That’s why we have to pay $329 for the GS3 that the other carriers sell for $199.

        As a B2B customer of T-Mobile with several hundred lines active I’ve seen customer service decline tremendously.  The Activation’s and Migrations dept. based out of the Philippines is a joke. They are very mis-informed and can never provide any service that isn’t scripted well ahead of time.  I have to keep following up with CS several times just to complete a port in because the reps who handle the original transaction never seem to get it right.  One day I call in and “I’m not authorized on my account or my password isn’t correct,” then the next day I’m good.  I have grandfathered data plans that are clearly marked for my accounts but some reps refuse to honor them.  

        I just don’t get the poor level of service I get from a company whom I used to brag about to everyone.  DT needs to let TMOUSA go to a carrier who can afford to manage their sub base or just sell the company off into bits and pieces.  There isn’t enough room in the US wireless industry for both Sprint and T-Mobile.  One of them needs to go away so the other can flourish.  

        • Trevnerdio

          Yes, the CS has taken a tremendous fall. I, too, used to brag of T-Mobile and how their customer service was great, speeds fast, and prices low. Gone are the days of 2 of those 3. In my small city of Panama City, FL, I see anywhere from 5-24 or so mbps. So, the speed is still here, but the rest…it just isn’t looking so good. I’m trying to keep my friends from switching to others carriers but I’m thinking to myself “they have good motives…T-Mo isn’t the company they used to be” My friend said his family might switch to another carrier because they keep raising the price on them. It’s really sad to see a great company fall like this.

          I think they should not focus quite as much on LTE, rather getting their number 1 or 2 spot back in customer service! That really attracts people to a network.

        • Glad I Left CA

          Bro… VZ and AT&T raise their rates every year also.  Look at their ARPU, or AVERAGE REVENUE PER USER… Their ARPU has gone up every year, year over year.  So has T-Mo, so has AT&T.  If you don’t, you die.  Speeds go up, prices go up.  Do you know how much it costs the companies to provide speeds like that?  All the infrastructure?  All the fiber?  Routers?  People?  Cell sites?

          T-Mobile has stopped the bleeding now.  With new phones coming like the HTC One X+ (!!!!!) before anyone else, and supposedly the stupid iPhone in October, I think things will look up.  But don’t hate on a company for making money.  

        • Trevnerdio

          I understand that but I’m still on a grandfathered plan where our prices hardly rise year to year. We’ve been customers for 13 years. And is the iPhone seriously coming to T-Mobile? That sucks. But if it brings in customers…more power to them. I’m gonna miss my awesome speeds once the iPhone hoards come rolling in and trample the network.

        • Littlesis1774

           Android using more data then iphones

        • Trevnerdio

          That’s not what I mean. Everyoneee has the iPhone and it really slowed AT&T’s network because of the massive volume of devices, even though they’re not putting as much through

  • Dennis Holland

    I was a T-Mobile customer for 7 years after the AT&T & T-Mobile thing I realize then that the owners of T-Mobile was ready to get rid of it.

     Let’s face it T-Mobile right now is a sinking ship they barely get any new major phone releases or they get them super late Galaxy Note and t-mo is steady losing contract customers like crazy and there monthly service is doing good though which makes them a better metro pcs to me.

    Just look at it t-mo customer care used to win J.D. Power awards almost every year but now they are dead last there are store closures and when you go into a t-mo oppose to verizon & att you can tell the difference it’s like t-mo stores don’t even want your business . Maybe this is what T-Mobile really needs to survive and compete is new hungry owners.

  • klrywuzhere

    I also work in a call center, in the U.S. and have for a very long time.
    1. People call in daily and ask why their bill is high. My first question is, have you looked at your bill? The answer 90 percent of the time is no, I never look at my bill.
    2. Tmo is a for profit company. For years they were at the top for JD Power. Why? Because they were giving everything away. Customer calls in and says this is wrong, credit gets issued. This is no longer the case. Inappropriate charges should and will be waived by your rep. If we get charged for it, you get charged for it. Simple
    3.As employees, we can go back and forth, and point fingers. The job is tough, if you do well, you get compensated appropriately. All of this is dependent on all of us, being on the same page, and working together.
    4. We want to help. Some things I can do, some things I can’t. Anyone who calls in to tmo and berates the rep, or requests a superviser or customer loyalty, just plain silly, in most cases the answer I gave you is the only one I have. Unless you  have legitimate beef, understand that the person on the other end is a human too, mistakes get made, people don’t do the job correctly, or refuse to investigate a problem. Alot of us still want to give you the best we have.

    In the end, there are lots of reasons why. Always a choice here. 

  • http://benpike.net/ Ben Pike

    The “Facepalm Picard” is my favorite meme

  • AM3RIG

    I think DT trying to sell the T-MOBILE USA to a downgraded/ ghetto county (third world country). 

    Third world country (mexico or south america) take over THE T-MOBILE USA, I  will withdrawal if made happened..

    • Alan Salazar

      Mexico would not be a downgrade. If T-Mobile was bought by America Movil, it would be part of the fourth largest wireless mobile network in the world. In fact this company already has TracFone, Net10 Straight talk,Safelink Wireless in the United states. It has all the same technology as we have in the United States such as LTE. and is the largest company in infrastructure. So next time you decide to mention Mexico as a downgrade, you might have to do some research, because I am a proud Mexican and I love this country but only ignorant people (YOU) would say this kind of stuff.  

    • Joey

      Before you put down another country in a forum where people speak English try learning how to spell in English first.  And look up the term “ghetto.”  It has nothing to do with those south of our US border.  

    • WirelessRefugee

      You moron. Someone last year made the same racist “third world” comment when I mentioned Carlos Slim, who happens to be the world’s richest man, a resident and citizen of Mexico and is quietly taking over U.S. prepaid.

      http://www.domain-b.com/industry/telecom/20120511_boost_presence.html

  • Richard Yarrell

    Bloomberg must be bored. Tmobile isn’t going anywhere it is a GSM carrier that will remain in vible business.

    • squiddy20

      1. I’m curious what you meant by “vible” seeing how there’s no word in the English dictionary with that spelling, and the fact that if you actually had a SGSIII like you claim, autocorrect would have easily picked out that huge misspelling.
      2. Look at the stats moron. T-Mobile is the THE smallest of the “big 4″ cell phone companies. It has the THE smallest voice/data footprint, with THE lowest subscriber base. Low subsciber base means little to no profit, especially when you’re spending money out of your ass trying to upgrade your network. The fact that it’s a GSM carrier has absolutely nothing to do with it. Get your facts straight.

      • bleeew

        Doesnt it have more coverage than sprint?

    • Richard Yarrell

      You must not have to much of a life going on. Your not a Tmobile customer so why are you so worried about Tmobile. Stay on Verizon and bud out of Tmobile affairs. Your simply nothing more than a bore. I Gladly left your useless carrier Verizon due to poor service. Piss poor Dbm and asu and dreadful signal strength and crappy reception. Get over it paying more doesn’t mean the best. Your clearly misguided as usual. Go troll elsewhere chump.

      • squiddy20

        You’re one to talk about being “misguided” seeing how: A) you’re replying to yourself and not to me. B) I’ve stated many many many times how I’m on Sprint, have been for years, and you can’t even get that little fact straight. C) I’m not “worried about” T-Mobile, I’m just correcting your sorry ass. D) Just because YOU had poor reception and problems in YOUR area, doesn’t mean its the same for the other 109 MILLION Verizon customers. You really have no clue what you’re talking about. As usual.

      • Richard Yarrell

        Man I feel sorry for Sprint you are a customer of them?? What a useless soul you have become over all these years. Sprint should KICK your pitiful college ass to the curb since you are trolling on tmo news sites. Guess it’s a pretty dull college weekend. Go play with yourself you idiot..

        • squiddy20

          Hahahaha! Again with replying to the wrong comment? Seriously, you must have some huge grubby fingers and not know how to use the pinch-to-zoom or double tap function to accomplish this feat! I guess you’ll never learn. 
          “Sprint should KICK your pitiful college ass to the curb since you are trolling on tmo news sites” …says the moron who not even 1 year ago was doing the same thing but with Verizon instead of T-Mobile. Good one you stupid hypocrite. I can’t count the number of times while you were with Sprint on your “legendary” Evo 3D that you talked about Verizon’s HTC “Thunderdud” and how all other carriers were “pissing/shitting on” Verizon. Does Dicky hate the taste of his own medicine?

  • Attrocks

    Sprint is going to buy tmobile in 2014′ the writing is on the wall

    • http://tmonews.com David

      Sprint isn’t in any sort of economical position to buy T-Mobile.

  • jon

    Sorry to feed the troll but I must say it is quite pathetic you spend your time on a blog site about tmob and you only spew vomit.  That truly shows little brains.  My guess is you’re about two brain cells away from drooling on yourself.  You should really take what limited intelligence you have and put it into something more positive and/or constructive.

  • None

    Umm… HUH?